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Alice first meets the Hatter at the Mad Tea Party in Alice's Adventures in Wonderland. His opening gambit is not promising: `Your hair wants cutting,' said the Hatter. He had been looking at Alice for some time with great curiosity, and this was his first speech.
But Lewis Carroll did not invent the phrase, although he did create the character. The phrases 'mad as a hatter' and mad as a March hare were common at the time Lewis Carroll wrote (1865 was the first publication date of Alice). The phrase had been in common use in 1837, almost 30 years earlier.